FIRST DIVISION
BOSTON BANK OF THE G. R. No. 158149
OF COMMERCE),
Petitioner, Present:
PANGANIBAN, J., Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR., and
CHICO-NAZARIO, JJ.
PERLA P. MANALO and CARLOS
MANALO, JR.,
Promulgated:
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari of the Decision[1]
of the Court of Appeals (CA) in CA-G.R. CV No. 47458 affirming, on appeal, the Decision[2]
of the Regional Trial Court (RTC) of
The Antecedents
The Xavierville Estate, Inc. (XEI) was
the owner of parcels of land in
On September 8, 1967, XEI, through its General Manager,
Antonio Ramos, as vendor, and The Overseas Bank of Manila (OBM), as vendee,
executed a “Deed of Sale of Real Estate” over some residential lots in the
subdivision, including Lot 1, Block 2, with an area of 907.5 square meters, and
Lot 2, Block 2, with an area of 832.80 square meters. The transaction was subject
to the approval of the Board of Directors of OBM, and was covered by real
estate mortgages in favor of the Philippine National Bank as security for its
account amounting to P5,187,000.00, and the Central Bank of the P22,185,193.74.[4] Nevertheless, XEI continued selling the
residential lots in the subdivision as agent of OBM.[5]
Sometime in 1972, then XEI president Emerito Ramos, Jr.
contracted the services of Engr. Carlos Manalo, Jr. who was in business of
drilling deep water wells and installing pumps under the business name
Hurricane Commercial, Inc. For P34,887.66, Manalo, Jr. installed a water
pump at Ramos’ residence at the corner of P34,887.66 Ramos
owed him. XEI, through Ramos,
agreed. In a letter dated
In a letter dated P200.00
per square meter, or a total of P348,060.00, with a 20% down payment of
the purchase price amounting to P69,612.00 less the P34,887.66
owing from Ramos, payable on or before December 31, 1972; the corresponding
Contract of Conditional Sale would then be signed on or before the same date,
but if the selling operations of XEI resumed after December 31, 1972, the
balance of the downpayment would fall due then, and the spouses would sign the
aforesaid contract within five (5) days from receipt of the notice of
resumption of such selling operations. It was also stated in the letter that,
in the meantime, the spouses may introduce improvements thereon subject to the
rules and regulations imposed by XEI in the subdivision. Perla Manalo conformed
to the letter agreement.[7]
The spouses Manalo took possession of the property on
In the meantime, many of the lot buyers refused to pay their
monthly installments until they were assured that they would be issued
1973, XEI furnished her with a statement of their account as of July 31, 1973,
showing that they had a balance of P34,724.34 on the downpayment of the
two lots after deducting the account of Ramos, plus P3,819.68[10]
interest thereon from September 1, 1972 to July 31, 1973, and that the
interests on the unpaid balance of the purchase price of P278,448.00
from September 1, 1972 to July 31, 1973 amounted to P30,629.28.[11] The spouses were informed that they were
being billed for said unpaid interests.[12]
On
Sometime in June 1976, Manalo, Jr. constructed a business
sign in the sidewalk near his house. In a letter dated
Subsequently, XEI turned over its selling operations to OBM,
including the receivables for lots already contracted and those yet to be sold.[18]
On
Meanwhile, on
Subsequently, the Commercial Bank of Manila (CBM) acquired
the Xavierville Estate from OBM. CBM wrote Edilberto Ng, the president of
Xavierville Homeowners Association that, as of
In a letter dated
On
While the case was pending, the spouses Manalo wrote CBM to
offer an amicable settlement, promising to abide by the purchase price of the
property (P313,172.34), per agreement with XEI, through Ramos. However,
on P1,500.00 per
square meter of the property was a reasonable
starting point for negotiation of the settlement.[29]
The spouses rejected the counter proposal,[30]
emphasizing that they would abide by their original agreement with XEI. CBM
moved to withdraw its complaint[31]
because of the issues raised.[32]
In the meantime, the CBM was renamed the Boston Bank of the
The plaintiffs alleged therein that they had always been
ready, able and willing to pay the installments on the lots sold to them by the
defendant’s remote predecessor-in-interest, as might be or stipulated in the
contract of sale, but no contract was forthcoming; they constructed their house
worth P2,000,000.00 on the property in good faith; Manalo, Jr., informed
the defendant, through its counsel, on October 15, 1988 that he would abide by
the terms and conditions of his original agreement with the defendant’s
predecessor-in-interest; during the hearing of the ejectment case on October
16, 1988, they offered to pay P313,172.34 representing the balance on
the purchase price of said lots; such tender of payment was rejected, so that
the subject lots could be sold at considerably higher prices to third parties.
Plaintiffs further alleged that upon payment of the P313,172.34,
they were entitled to the execution and delivery of a Deed of Absolute Sale
covering the subject lots, sufficient in form and substance to transfer title
thereto free and clear of any and all liens and encumbrances of whatever kind
and nature.[33] The plaintiffs prayed that, after due
hearing, judgment be rendered in their favor, to wit:
WHEREFORE, it is respectfully prayed that after due hearing:
(a) The defendant
should be ordered to execute and deliver a Deed of Absolute Sale over subject
lots in favor of the plaintiffs after payment of the sum of P313,172.34,
sufficient in form and substance to transfer to them titles thereto free and
clear of any and all liens and encumbrances of whatever kind or nature;
(b) The defendant
should be held liable for moral and exemplary damages in the amounts of P300,000.00
and P30,000.00, respectively, for not promptly executing and delivering
to plaintiff the necessary Contract of Sale, notwithstanding repeated demands
therefor and for having been constrained to engage the services of undersigned
counsel for which they agreed to pay attorney’s fees in the sum of P50,000.00
to enforce their rights in the premises and appearance fee of P500.00;
(c) And for such other and further relief as may be just and equitable in the premises.[34]
In its Answer to the complaint, the defendant interposed the
following affirmative defenses: (a) plaintiffs had no cause of action against
it because the August 22, 1972 letter agreement between XEI and the plaintiffs
was not binding on it; and (b) “it had no record of any contract to sell
executed by it or its predecessor, or of any statement of accounts from its
predecessors, or records of payments of the plaintiffs or of any documents
which entitled them to the possession of the lots.”[35] The defendant, likewise, interposed
counterclaims for damages and attorney’s fees and prayed for the eviction of
the plaintiffs from the property.[36]
Meanwhile, in a letter dated P942,648.70,
representing the balance of the purchase price of the two lots based on the
current market value.[37] However, the defendant rejected the same and
insisted that for the smaller lot, they pay P4,500,000.00, the current
market value of the property.[38] The
defendant insisted that it owned the property since there was no contract or
agreement between it and the plaintiffs’ relative thereto.
During the trial, the plaintiffs adduced in evidence the
separate Contracts of Conditional Sale executed between XEI and Alberto Soller;[39]
Alfredo Aguila,[40]
and Dra. Elena Santos-Roque[41]
to prove that XEI continued selling residential lots in the subdivision as
agent of OBM after the latter had acquired the said lots.
For its part, defendant presented in evidence the letter
dated P34,877.66 downpayment for the two lots, but did not
notify them of said forfeiture.[42] It alleged that OBM considered the lots
unsold because the titles thereto bore no annotation that they had been sold
under a contract of conditional sale, and the plaintiffs were not notified of
XEI’s resumption of its selling operations.
On
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant –
(a) Ordering the
latter to execute and deliver a Deed of Absolute Sale over Lot 1 and 2, Block 2
of the Xavierville Estate Subdivision after payment of the sum of P942,978.70
sufficient in form and substance to transfer to them titles thereto free from
any and all liens and encumbrances of whatever kind and nature.
(b) Ordering the
defendant to pay moral and exemplary damages in the amount of P150,000.00;
and
(c) To pay
attorney’s fees in the sum of P50,000.00 and to pay the costs.
SO ORDERED.[43]
The trial court
ruled that under the
Boston Bank appealed the decision to the CA, alleging that the lower court erred in (a) not concluding that the letter of XEI to the spouses Manalo, was at most a mere contract to sell subject to suspensive conditions, i.e., the payment of the balance of the downpayment on the property and the execution of a deed of conditional sale (which were not complied with); and (b) in awarding moral and exemplary damages to the spouses Manalo despite the absence of testimony providing facts to justify such awards.[44]
On
WHEREFORE, the
appealed decision is AFFIRMED with MODIFICATIONS that (a) the figure “P942,978.70”
appearing [in] par. (a) of the dispositive portion thereof is changed to “P313,172.34
plus interest thereon at the rate of 12% per annum from
SO ORDERED.[45]
The appellate court sustained the ruling of the RTC that the
appellant and the appellees had executed a Contract to Sell over the two lots
but declared that the balance of the purchase price of the property amounting
to P278,448.00 was payable in fixed amounts, inclusive of pre-computed
interests, from delivery of the possession of the property to the appellees on
a monthly basis for 120 months, based on the deeds of conditional sale executed
by XEI in favor of other lot buyers.[46] The CA also declared that, while XEI must
have resumed its selling operations before the end of 1972 and the downpayment
on the property remained unpaid as of December 31, 1972, absent a written
notice of cancellation of the contract to sell from the bank or notarial demand
therefor as required by Republic Act No. 6552, the spouses had, at the very
least, a 60-day grace period from January 1, 1973 within which to pay the
same.
Boston Bank filed a motion for the reconsideration of the
decision alleging that there was no perfected contract to sell the two lots, as
there was no agreement between XEI and the respondents on the manner of payment
as well as the other terms and conditions of the sale. It further averred that its
claim for recovery of possession of the aforesaid lots in its Memorandum dated
Boston Bank, now petitioner, filed the instant petition for
review on certiorari assailing the CA
rulings. It maintains that, as held by the CA, the records do not reflect any
schedule of payment of the 80% balance of the purchase price, or P278,448.00.
Petitioner insists that unless the parties had agreed on the manner of payment
of the principal amount, including the other terms and conditions of the
contract, there would be no existing contract of sale or contract to sell.[47] Petitioner avers that the letter agreement to
respondent spouses dated August 22, 1972 merely confirmed their reservation for
the purchase of Lot Nos. 1 and 2, consisting of 1,740.3 square meters, more or
less, at the price of P200.00 per square meter (or P348,060.00),
the amount of the downpayment thereon and the application of the P34,887.00
due from Ramos as part of such downpayment.
Petitioner asserts that there is no factual basis for the CA
ruling that the terms and conditions relating to the payment of the balance of
the purchase price of the property (as agreed upon by XEI and other lot buyers
in the same subdivision) were also applicable to the contract entered into
between the petitioner and the respondents. It insists that such a ruling is contrary to law,
as it is tantamount to compelling the parties to agree to something that was
not even discussed, thus, violating their freedom to contract. Besides, the
situation of the respondents cannot be equated with those of the other lot
buyers, as, for one thing, the respondents made a partial payment on the
downpayment for the two lots even before the execution of any contract of
conditional sale.
Petitioner posits that, even on the assumption that there was
a perfected contract to sell between the parties, nevertheless, it cannot be
compelled to convey the property to the respondents because the latter failed
to pay the balance of the downpayment of the property, as well as the balance
of 80% of the purchase price, thus resulting in the extinction of its obligation
to convey title to the lots to the respondents.
Another egregious error of the CA, petitioner avers, is the
application of Republic Act No. 6552. It insists that such law applies only to
a perfected agreement or perfected contract to sell, not in this case where the
downpayment on the purchase price of the property was not completely paid, and
no installment payments were made by the buyers.
Petitioner also faults the CA for declaring that petitioner
failed to serve a notice on the respondents of cancellation or rescission of
the contract to sell, or notarial demand therefor. Petitioner insists that its
For their part, respondents assert that as long as there is a
meeting of the minds of the parties to a contract of sale as to the price, the
contract is valid despite the parties’ failure to agree on the manner of
payment. In such a situation, the balance of the purchase price would be
payable on demand, conformably to Article 1169 of the New Civil Code. They
insist that the law does not require a party to agree on the manner of payment
of the purchase price as a prerequisite to a valid contract to sell. The
respondents cite the ruling of this Court in Buenaventura v. Court of Appeals[48]
to support their submission.
They argue that even if the manner and timeline for the
payment of the balance of the purchase price of the property is an essential
requisite of a contract to sell, nevertheless, as shown by their letter agreement
of August 22, 1972 with the OBM, through XEI and the other letters to them, an
agreement was reached as to the manner of payment of the balance of the
purchase price. They point out that such letters referred to the terms of the
terms of the deeds of conditional sale executed by XEI in favor of the other
lot buyers in the subdivision, which contained uniform terms of 120 equal monthly
installments (excluding the downpayment, but inclusive of pre-computed
interests). The respondents assert that XEI was a real estate broker and knew
that the contracts involving residential lots in the subdivision contained
uniform terms as to the manner and timeline of the payment of the purchase
price of said lots.
Respondents further posit that the terms and conditions to be
incorporated in the “corresponding contract of conditional sale” to be executed
by the parties would be the same as those contained in the contracts of
conditional sale executed by lot buyers in the subdivision. After all, they
maintain, the contents of the corresponding contract of conditional sale
referred to in the
The respondents aver that the issues raised by the petitioner
are factual, inappropriate in a petition for review on certiorari under Rule 45 of the Rules of Court. They assert that
petitioner adopted a theory in litigating the case in the trial court, but
changed the same on appeal before the CA, and again in this Court. They argue that the petitioner is estopped
from adopting a new theory contrary to those it had adopted in the trial and
appellate courts. Moreover, the
existence of a contract of conditional sale was admitted in the letters of XEI and
OBM. They aver that they became owners of the lots upon delivery to them by
XEI.
The issues for resolution are the following: (1) whether the
factual issues raised by the petitioner are proper; (2) whether petitioner or
its predecessors-in-interest, the XEI or the OBM, as seller, and the respondents,
as buyers, forged a perfect contract to sell over the property; (3) whether
petitioner is estopped from contending that no such contract was forged by the
parties; and (4) whether respondents has a cause of action against the
petitioner for specific performance.
The rule is that before this Court, only legal issues may be
raised in a petition for review on certiorari.
The reason is that this Court is not a trier of facts, and is not to review and
calibrate the evidence on record. Moreover, the findings of facts of the trial
court, as affirmed on appeal by the Court of Appeals, are conclusive on this
Court unless the case falls under any of the following exceptions:
(1) when the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners’ main and reply briefs are not disputed by the respondents; and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record.[50]
We have reviewed the records and we find that, indeed, the
ruling of the appellate court dismissing petitioner’s appeal is contrary to law
and is not supported by evidence. A careful examination of the factual backdrop
of the case, as well as the antecedental proceedings constrains us to hold that
petitioner is not barred from asserting that XEI or OBM, on one hand, and the
respondents, on the other, failed to forge a perfected contract to sell the
subject lots.
It must be stressed that the Court may consider an issue not
raised during the trial when there is plain error.[51] Although a factual issue was not raised in
the trial court, such issue may still be considered and resolved by the Court
in the interest of substantial justice, if it finds that to do so is necessary
to arrive at a just decision,[52]
or when an issue is closely related to an issue raised in the trial court and
the Court of Appeals and is necessary for a just and complete resolution of the
case.[53]
When the trial court decides a case in favor of a party on certain grounds, the
Court may base its decision upon some other points, which the trial court or
appellate court ignored or erroneously decided in favor of a party.[54]
In this case, the issue of whether XEI had agreed to allow
the respondents to pay the purchase price of the property was raised by the
parties. The trial court ruled that the
parties had perfected a contract to sell, as against petitioner’s claim that no
such contract existed. However, in resolving the issue of whether the
petitioner was obliged to sell the property to the respondents, while the CA
declared that XEI or OBM and the respondents failed to agree on the schedule of
payment of the balance of the purchase price of the property, it ruled that XEI
and the respondents had forged a contract to sell; hence, petitioner is
entitled to ventilate the issue before this Court.
We agree with petitioner’s contention that, for a perfected
contract of sale or contract to sell to exist in law, there must be an
agreement of the parties, not only on the price of the property sold, but also
on the manner the price is to be paid by the vendee.
Under Article 1458 of the New Civil Code, in a contract of
sale, whether absolute or conditional, one of the contracting parties obliges
himself to transfer the ownership of and deliver a determinate thing, and the
other to pay therefor a price certain in money or its equivalent. A contract of sale is perfected at the moment
there is a meeting of the minds upon the thing which is the object of the
contract and the price. From the
averment of perfection, the parties are bound, not only to the fulfillment of
what has been
expressly stipulated, but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law.[55] On the other hand, when the contract of sale
or to sell is not perfected, it cannot, as an independent source of obligation,
serve as a binding juridical relation between the parties.[56]
A definite agreement as to the price is an essential element
of a binding agreement to sell personal or real property because it seriously
affects the rights and obligations of the parties. Price is an essential element in the
formation of a binding and enforceable contract of sale. The fixing of the price can never be left to
the decision of one of the contracting parties. But a price fixed by one of the
contracting parties, if accepted by the other,
gives rise to a perfected sale.[57]
It is not enough for the parties to agree on the price of the
property. The parties must also agree on the manner of payment of the price of
the property to give rise to a binding and enforceable contract of sale or
contract to sell. This is so because the agreement as to the manner of payment
goes into the price, such that a disagreement on the manner of payment is
tantamount to a failure to agree on the price.[58]
In a contract to sell property by
installments, it is not enough that the parties agree on the price as well as
the amount of downpayment. The parties
must, likewise, agree on the manner of payment of the balance of the purchase
price and on the other terms and conditions relative to the sale. Even if the buyer makes a downpayment or
portion thereof, such payment cannot be considered as sufficient proof of the
perfection of any purchase and sale between the parties. Indeed, this Court ruled in Velasco v. Court of Appeals[59]
that:
It is not
difficult to glean from the aforequoted averments that the petitioners
themselves admit that they and the respondent still had to meet and agree on
how and when the down-payment and the installment payments were to be paid.
Such being the situation, it cannot, therefore, be said that a definite and
firm sales agreement between the parties had been perfected over the lot in
question. Indeed, this Court has already ruled before that a definite agreement
on the manner of payment of the purchase price is an essential element in the
formation of a binding and enforceable contract of sale. The fact, therefore,
that the petitioners delivered to the respondent the sum of P10,000.00
as part of the downpayment that they had to pay cannot be considered as
sufficient proof of the perfection of any purchase and sale agreement between
the parties herein under article 1482 of the New Civil Code, as the petitioners
themselves admit that some essential matter – the terms of payment – still had
to be mutually covenanted.[60]
We agree with the contention of the petitioner that, as held
by the CA, there is no showing, in the records, of the schedule of payment of
the balance of the purchase price on the property amounting to P278,448.00. We have meticulously reviewed the records,
including Ramos’ February 8, 1972 and August 22, 1972 letters to respondents,[61]
and find that said parties confined themselves to agreeing on the price of the
property (P348,060.00), the 20% downpayment of the purchase price (P69,612.00),
and credited respondents for the P34,887.00 owing from Ramos as part of
the 20% downpayment. The timeline for the payment of the balance of the
downpayment (P34,724.34) was also agreed upon, that is, on or before XEI
resumed its selling operations, on or before
The
Mr. Carlos T. Manalo, Jr.
Hurricane Rotary Well Drilling
Dear Mr. Manalo:
We agree with your verbal offer to exchange the proceeds of your contract with us to form as a down payment for a lot in our Xavierville Estate Subdivision.
Please let us know your choice lot so that we can fix the price and terms of payment in our conditional sale.
Sincerely yours,
XAVIERVILLE ESTATE, INC.
(Signed)
EMERITO B. RAMOS, JR.
President
CONFORME:
(Signed)
CARLOS T. MANALO, JR.
Hurricane Rotary Well Drilling[62]
The
Mrs. Perla P. Manalo
Dear Mrs. Manalo:
This is to confirm your reservation
of Lot Nos. 1 and 2; Block 2 of our consolidation-subdivision plan as amended,
consisting of 1,740.3 square meters more or less, at the price of P200.00
per square meter or a total price of P348,060.00.
It is agreed that as soon as we resume selling operations, you must pay a down payment of 20% of the purchase price of the said lots and sign the corresponding Contract of Conditional Sale, on or before December 31, 1972, provided, however, that if we resume selling after December 31, 1972, then you must pay the aforementioned down payment and sign the aforesaid contract within five (5) days from your receipt of our notice of resumption of selling operations.
In the meanwhile, you may introduce such improvements on the said lots as you may desire, subject to the rules and regulations of the subdivision.
If the above terms and conditions are acceptable to you, please signify your conformity by signing on the space herein below provided.
Thank you.
Very truly yours,
XAVIERVILLE ESTATE, INC. CONFORME:
By:
(Signed) (Signed)
EMERITO B. RAMOS, JR. PERLA P. MANALO
President Buyer[63]
Based on these two letters, the determination of the terms of
payment of the P278,448.00 had yet
to be agreed upon on or before
Jurisprudence is that if a material element of a contemplated
contract is left for future negotiations, the same is too indefinite to be
enforceable.[64]
And when an essential element of a contract is reserved for future agreement of
the parties, no legal obligation arises until such future agreement is
concluded.[65]
So long as an essential element entering into the proposed
obligation of either of the parties remains to be determined by an agreement
which they are to make, the contract is incomplete and unenforceable.[66]
The reason is that such a contract is lacking in the necessary qualities of
definiteness, certainty and mutuality.[67]
There is no evidence on record to prove that XEI or OBM and
the respondents had agreed, after
The ruling of this Court in Buenaventura v. Court of Appeals has no bearing in this case
because the issue of the manner of payment of the purchase price of the property
was not raised therein.
We reject the submission of respondents that they and Ramos
had intended to incorporate the terms of payment contained in the three
contracts of conditional sale executed by XEI and other lot buyers in the
“corresponding contract of conditional sale,” which would later be signed by
them.[69]
We have meticulously reviewed the respondents’ complaint and find no such
allegation therein.[70] Indeed, respondents merely alleged in their
complaint that they were bound to pay the balance of the purchase price of the
property “in installments.” When
respondent Manalo, Jr. testified, he was never asked, on direct examination or
even on cross-examination, whether the terms of payment of the balance of the
purchase price of the lots under the contracts of conditional sale executed by
XEI and other lot buyers would form part of the “corresponding contract of
conditional sale” to be signed by them simultaneously with the payment of the
balance of the downpayment on the purchase price.
We note that, in its letter to the respondents dated P278,448.00 monthly,
semi-annually or annually. The allegation that the payment of the P278,448.00
was to be paid in installments is, thus, vague and indefinite. Case
law is that, for a contract to be enforceable, its terms must be certain and
explicit, not vague or indefinite.[72]
There is no factual and legal basis for the CA ruling that,
based on the terms of payment of the balance of the purchase price of the lots
under the contracts of conditional sale executed by XEI and the other lot
buyers, respondents were obliged to pay the P278,448.00 with
pre-computed interest of 12% per annum in 120-month installments. As gleaned from the ruling of the appellate
court, it failed to justify its use of the terms of payment under the three
“contracts of conditional sale” as basis for such ruling, to wit:
On the other hand,
the records do not disclose the schedule of payment of the purchase price, net
of the downpayment. Considering, however, the Contracts of Conditional Sale
(Exhs. “N,” “O” and “P”) entered into by XEI with other lot buyers, it would
appear that the subdivision lots sold by XEI, under contracts to sell, were
payable in 120 equal monthly installments (exclusive of the downpayment but
including pre-computed interests) commencing on delivery of the lot to the
buyer.[73]
By its ruling, the CA unilaterally supplied an essential
element to the letter agreement of XEI and the respondents. Courts should not
undertake to make a contract for the parties, nor can it enforce one, the terms
of which are in doubt.[74] Indeed, the Court emphasized in Chua v. Court of Appeals[75] that it is not the province of a court
to alter a contract by construction or to make a new contract for the parties;
its duty is confined to the interpretation of the one which they have made for
themselves, without regard to its wisdom or folly, as the court cannot supply
material stipulations or read into contract words which it does not contain.
Respondents, as plaintiffs below, failed to allege in their
complaint that the terms of payment of the P278,448.00 to be
incorporated in the “corresponding contract of conditional sale” were those
contained in the contracts of conditional sale executed by XEI and Soller,
Aguila and Roque.[76] They likewise failed to prove such allegation
in this Court.
The bare fact that other lot buyers were allowed to pay the
balance of the purchase price of lots purchased by them in 120 or 180 monthly
installments does not constitute evidence that XEI also agreed to give the
respondents the same mode and timeline of payment of the P278,448.00.
Under Section 34, Rule 130 of the Revised Rules of Court,
evidence that one did a certain thing at one time is not admissible to prove
that he did the same or similar thing at another time, although such evidence
may be received to prove habit, usage, pattern of conduct or the intent of the
parties.
Similar acts as evidence. – Evidence that one did or did not do a certain thing at one time is not admissible to prove that he did or did not do the same or a similar thing at another time; but it may be received to prove a specific intent or knowledge, identity, plan, system, scheme, habit, custom or usage, and the like.
However, respondents failed to allege and prove, in the trial
court, that, as a matter of business usage, habit or pattern of conduct, XEI
granted all lot buyers the right to pay the balance of the purchase price in
installments of 120 months of fixed amounts with pre-computed interests, and
that XEI and the respondents had intended to adopt such terms of payment
relative to the sale of the two lots in question. Indeed, respondents adduced
in evidence the three contracts of conditional sale executed by XEI and other
lot buyers merely to prove that XEI continued to sell lots in the
subdivision as sales agent of OBM after it acquired said lots, not to
prove usage, habit or pattern of conduct on the part of XEI to require all lot buyers in the subdivision to pay
the balance of the purchase price of said lots in 120 months. It further failed
to prive that the trial court admitted the said deeds[77]
as part of the testimony of respondent Manalo, Jr.[78]
Habit, custom, usage
or pattern of conduct must be proved like any other facts. Courts must contend
with the caveat that, before they admit evidence of usage, of habit or pattern
of conduct, the offering party must establish the degree of specificity and
frequency of uniform response that ensures more than a mere tendency to act in
a given manner but rather, conduct that is semi-automatic in nature. The offering
party must allege and prove specific, repetitive conduct that might constitute
evidence of habit. The examples offered
in evidence to prove habit, or pattern of evidence must be numerous enough to
base on inference of systematic conduct. Mere similarity of contracts does not
present the kind of sufficiently similar circumstances to outweigh the danger
of prejudice and confusion.
In determining whether the examples are numerous enough, and
sufficiently regular, the key criteria are adequacy of sampling and uniformity
of response. After all, habit means a course of behavior of a person regularly
represented in like circumstances.[79] It is only when examples offered to establish
pattern of conduct or habit are numerous enough to lose an inference of systematic
conduct that examples are admissible. The key criteria are adequacy of sampling
and uniformity of response or ratio of reaction to situations.[80]
There are cases where the course of dealings to be followed
is defined by the usage of a particular trade or market or profession. As expostulated by Justice Benjamin Cardozo
of the United States Supreme Court: “Life casts the moulds of conduct, which
will someday become fixed as law. Law preserves the moulds which have taken
form and shape from life.”[81]
Usage furnishes a standard for the measurement of many of the rights and acts
of men.[82]
It is also well-settled that parties who contract on a subject matter
concerning which known usage prevail, incorporate such usage by implication
into their agreement, if nothing is said to be contrary.[83]
However, the respondents inexplicably failed to adduce
sufficient competent evidence to prove usage, habit or pattern of conduct of
XEI to justify the use of the terms of payment in the contracts of the other
lot buyers, and thus grant respondents the right to pay the P278,448.00
in 120 months, presumably because of respondents’ belief that the manner of
payment of the said amount is not an essential element of a contract to
sell. There is no evidence that XEI or
OBM and all the lot buyers in the subdivision, including lot buyers who pay
part of the downpayment of the property purchased by them in the form of
service, had executed contracts of conditional sale containing uniform terms
and conditions. Moreover, under the terms of the contracts of conditional sale
executed by XEI and three lot buyers in the subdivision, XEI agreed to grant
120 months within which to pay the balance of the purchase price to two of
them, but granted one 180 months to do so.[84] There is no evidence on record that XEI
granted the same right to buyers of two or more lots.
Irrefragably, under Article 1469 of the New Civil Code, the
price of the property sold may be considered certain if it be so with reference
to another thing certain. It is sufficient
if it can be determined by the stipulations of the contract made by the parties
thereto[85]
or by reference to an agreement incorporated in the contract of sale or
contract to sell or if it is capable of being ascertained with certainty in
said contract;[86]
or if the contract contains express or implied provisions by which it may be
rendered certain;[87]
or if it provides some method or criterion by which it can be definitely
ascertained.[88]
As this Court held in Villaraza v. Court
of Appeals,[89]
the price is considered certain if, by its terms, the contract furnishes a
basis or measure for ascertaining the amount agreed upon.
We have carefully reviewed the August 22, 1972 letter agreement
of the parties and find no direct or implied reference to the manner and schedule
of payment of the balance of the purchase price of the lots covered by the
deeds of conditional sale executed by XEI and that of the other lot buyers[90]
as basis for or mode of determination of the schedule of the payment by the
respondents of the P278,448.00.
The ruling of this Court in Mitsui Bussan Kaisha v. Manila Electric Railroad and Light Company[91]
is not applicable in this case because the basic price fixed in the contract
was P9.45 per long ton, but it was stipulated that the price was subject
to modification “in proportion to variations in calories and ash content, and
not otherwise.” In this case, the parties did not fix in their
letters-agreement, any method or mode of determining the terms of payment of
the balance of the purchase price of the property amounting to P278,448.00.
It bears stressing that the respondents failed and refused to
pay the balance of the downpayment and of the purchase price of the property
amounting to P278,448.00 despite notice to them of the resumption by XEI
of its selling operations. The
respondents enjoyed possession of the property without paying a centavo. On the other hand, XEI and OBM failed and
refused to transmit a contract of conditional sale to the respondents. The
respondents could have at least consigned the balance of the downpayment after
notice of the resumption of the selling operations of XEI and filed an action
to compel XEI or OBM to transmit to them the said contract; however, they
failed to do so.
As a consequence, respondents and XEI (or OBM for that
matter) failed to forge a perfected contract to sell the two lots; hence,
respondents have no cause of action for specific performance against
petitioner. Republic Act No. 6552 applies only to a perfected contract to sell and
not to a contract with no binding and enforceable effect.
IN LIGHT OF
ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. CV No. 47458 is REVERSED and
SET ASIDE. The Regional Trial Court of Quezon City,
Branch 98 is ordered to dismiss the complaint.
Costs against the respondents.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
CONSUELO YNARES-
Associate Justice
Pursuant to Section 13,
Article VIII of the Constitution, it is hereby certified that the conclusions
in the above decision were reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief
Justice
[1] Penned by Associate Justice Edgardo P. Cruz, with Associate Justices Oswaldo D. Agcaoili (retired) and Amelita G. Tolentino, concurring; rollo, pp. 9-19.
[2] Penned by Judge Justo M. Sultan; records, pp. 295-304.
[3] Exhibits “N,” “O” and “P,” folder of exhibits, pp. 37-57.
[4] Exhibit “L,” id. at 19.
[5] Exhibits “N,” “O” and “P,” id. at 37-57.
[6] Exhibit “A,” id. at 1.
[7] Exhibit “B,” id. at 2.
[8] Exhibit “Q-1,” id. at 60.
[9] TSN,
[10] Exhibit “E-1,” id. at 6.
[11]
[12] Exhibit “E,” id. at 5.
[13] Exhibit “F,” id. at 7.
[14]
[15] TSN,
[16] Exhibit “G,” folder of exhibits, p. 8.
[17] Exhibit “H,” id. at 9.
[18] TSN,
[19] Exhibit “H,” folder of exhibits, p. 9.
[20] Exhibits “1” and “2,” id. at 79-84.
[21]
[22] Exhibit “I-1,” id. at 11.
[23] Exhibit “J-1,” id. at 13.
[24] Exhibit “6,” id. at 91.
[25] Exhibit “7,” id. at 92.
[26]
[27] Exhibit “S,” id. at 68.
[28] Exhibit “T,” id. at 71.
[29] Exhibit “R,” id. at 65.
[30] Exhibit “R-1,” id. at 67.
[31] Exhibit “U,” id. at 74.
[32]
[33] Records, pp. 3-6.
[34]
[35]
[36]
[37] Exhibit “V,” folder of exhibits, p. 77.
[38] TSN,
[39] Exhibit “N,” folder of exhibits, p. 17.
[40] Exhibit “O,” id. at 44.
[41] Exhibit “P,” id. at 51.
[42] TSN,
[43] Records, p. 304.
[44] CA rollo, p. 32.
[45] Rollo, p. 85.
[46] Exhibits “N,” “O” and “P,” folder of exhibits, p. 82.
[47] Rollo, pp. 46-47.
[48] G.R.
No. 126376,
[49] 39 Phil. 624 (1919).
[50] Siasat v. Court of Appeals, 425 Phil. 139,145 (2002)
[51] Del Rosario v. Bonga, G.R. No. 136308,
[52] Abra Valley College, Inc. v. Aquino, G.R.
No. L-39086,
[53] F.F. Mañacop Construction Co., Inc. v. Court of Appeals, 334 Phil. 208, 212
(1997), citing Garrido v. CA, 236
SCRA 450 (1994).
[54] See Relativo v. Castro, 76 Phil. 563 (1946).
[55] GSIS
v.
[56] Jovan Land, Inc. v. Court of Appeals, 335 Phil. 626, 629 (1997).
[57] Article 1473, New Civil Code.
[58] Montecillo v. Reynes, 434 Phil. 456
(2002); San Miguel Proprietor
Philippines, Inc. v. Huang, 391 Phil. 636 (2000); Co v. Court of Appeals, 349 Phil. 749 (1998); Uraca v. Court of Appeals,344 Phil. 253 (1997); Toyota Car, Inc. v. Court of Appeals,314 Phil. 201 (1995.
[59] 151-A Phil. 868 (1973).
[60]
[61] Infra.
[62] Exhibit “A,” folder of exhibits, p. 1 (Underscoring supplied)
[63] Exhibit “B,” id. at 2.
[64] Ansorge v. Kane, 155 N.E. 683 (1927); A.M. Webb & Co. v. Robert P. Miller Co., 157 F.2d 865 (1946).
[65] Boatright v. Steinite Radio Corporation, 46 F. 2d 385 (1931).
[66] Williston on Contracts, Volume I, Section 45, 149 (3rd ed. 1957).
[67] Weigham v. Kilifer, 215 F. 168.
[68] TSN,
[69] Exhibits “N,” “O” & “P,” folder of exhibits, pp. 37-57.
[70] Supra, at note 22.
[71] Exhibit “G,” folder of exhibits, p. 8
[72] Potter v. Leitenberger Mach. Co., 166
[73] Rollo, p. 82.
[74]
[75] 361 Phil. 308, 317 (1999), citing Bacolod – Murcia Milling Co., Inc., v. Bana Nacional Filipino, 74 Phil. 675, 680 (1944).
[76] Supra, at note 66.
[77]
EXHIBIT “N” – Conditional Contract of Sale
executed by Xavierville Estate, Inc. in favor of Alberto Soller dated December
8, 1969, to prove that after Xavierville Estate sold its lots, it continued to
execute sales contracts over same in its name; EXHIBIT “O” – Xerox copy of Deed
of Absolute Sale executed by Xavierville Estate, Inc. in favor of Alfredo
Aguila dated May 20, 1970, to prove that although the lots in said subdivision
were already sold by virtue of EXHIBIT “L,” Commercial Bank of Manila (COMBANK)
the VENDEE still allowed Xavierville Estate to sign contracts in its name;
EXHIBIT “P” – Xerox copy of Deed of Absolute Sale executed by Xavierville
Estate, Inc. in favor of Elena Roque Santos dated June 29, 1970, to prove that
although lots in Xavierville Estate were already sold to Combank, the latter
still allowed Xavierville Estate to sign contracts in its name;
[78] Records, p. 128.
[79]
[80] Loughan v. Firestone Tire & Rubber Co., 749 F.2d. 1519 (1985).
[81] The Nature
of The Judicial Process (The
[82] Tong v. Borstad, 231 N.W. 2d. 795 (1975).
[83] Robinson v.
[84] Name of the purchasers
[85] Majarabas v. Leonardo, 11 Phil. 272 (1908).
[86] Kelley v. Creston Buick Sales Co., 34
N.W. 2d. 598 (1948).
[87] Hoskins v. Mclaughlin, 161 S.W.2d 395 (1942).
[88] Packard Fort Work, Inc. v. Van Zandt, 224
S.W.2d 896 (1949).
[89] 334
Phil. 750,760 (1997), citing Mararabas v.
Leonardo, supra.
[90] See note 66.
[91] 39 Phil. 624 (1919).